Ex-Lehman CEO Sues Estranged Son-in-Law Over Apartment Loan

June 19 (Bloomberg) -- Richard Fuld, the former chief
executive officer of Lehman Brothers Holdings Inc., sued his
estranged son-in-law over “deceptive conduct” related to a
loan for the purchase and renovation of a Manhattan apartment.

Fuld sued Aaron Packles for “inducing plaintiff to advance
significant sums for the purchase and renovation” of an
apartment on the ninth floor of 79 East 79th Street by “falsely
representing that defendant intended to repay that loan, failing
to disclose his true intention to aver falsely that the
apartment and renovations were a gift, and his failure to repay
those funds to date.”

Packles and Fuld’s daughter Christine paid $9.75 million in
cash for the apartment in 2007, shortly after they were married,
the New York Times reported in March 2009. They put the
apartment on the market in January 2009 for $12.95 million, and
lowered the asking price to $9.8 million six weeks later, the
Times said.

The 11-room apartment, with four bedrooms and four
bathrooms, features a private elevator and a dining room with
views of Central Park, according to a listing on the website of
Corcoran Group Real Estate. It was sold for $9 million in April
2011 to Joseph and Erica Samuels, according to city property
records.

Default Judgment

If Packles fails to appear to respond to Fuld’s
allegations, the suit seeks a default judgment of $12.9 million,
an equitable lien over the proceeds of the apartment sale, which
are currently being held in escrow, and an order directing
Packles to authorize the disbursement of the escrow, according
to the filing.

Fuld’s daughter filed for divorce in April 2010 in New York
State Supreme Court in Manhattan, and the case is still active,
according to online court records. Divorce records aren’t
available to the public under New York state law.

Packles, a managing director at Bank of America Corp.’s
Merrill Lynch unit, didn’t immediately return a phone call to
his office seeking comment. William Herman, an attorney for
Packles in the divorce case, declined to comment on Fuld’s suit,
and John Kornfeld, another Packles lawyer on the divorce, didn’t
immediately return a phone message seeking comment on the
filing. Bill Halldin, a spokesman for Bank of America, declined
to comment.

Fuld was chief executive of New York-based Lehman when its
collapse helped bring on the worst economic slump since the
Great Depression. The company filed for bankruptcy in September
2008 with assets of $639 billion.

The case is Fuld v. Packles, 155573/2013, New York State
Supreme Court, New York County (Manhattan).

To contact the reporter on this story:
Chris Dolmetsch in New York State Supreme Court at
8969 or cdolmetsch@bloomberg.net